Liquidation Loan-to-Value

MORE Markets enhances the traditional approach to decentralized lending and borrowing by enabling more nuanced and dynamic management of Liquidation Loan-to-Value (LLTV) thresholds for premium borrowers.

The LLTV ratio in MORE markets is a critical parameter that determines the maximum amount a borrower can obtain relative to the value of their collateral. This threshold indicates the point at which the borrower’s collateral becomes eligible for liquidation, should the market value of the collateral decrease relative to the loan and thus exceed this threshold.

For premium borrowers, this ratio is wholly determined by the borrower’s credit score, which is assessed by the market's assigned credit attestation service. Depending on their creditworthiness, each borrower is assigned a LLTV ratio, allowing for personalized lending terms that reflect their individual risk profile.

For example, a borrower with a high credit score of 814 may qualify for a maximum LLTV ratio of 200% in a given market, meaning they can borrow twice as much as their collateral. Conversely, a lower credit score like 204 will result in a more conservative LLTV ratio such as 125% in that same market.

As noted in the Credit Attestation Service section, each premium borrower's LLTV is dynamically adjusted based on the value of their assets indexed by the credit attestation service. As a result borrowers must remain aware of not just their collateral and loan value, but their overall portfolio value as well, in order to avoid liquidations and manage their collateral accordingly.